Interpol is leading a worldwide hunt for the Rotorua couple who have fled with millions of dollars worth of Westpac’s money.

The couple, who ran Rotorua’s BP Barnetts service station on Old Taupo Road, are Leo Gao and Australian girlfriend Cara Young.

They are understood to have applied to Westpac Bank for a $10,000 overdraft and mistakenly had $10 million paid into their account.

All legality and morality aside, you have to stop and think “What Would I Do” in this situation? Pretty easy to be sanctimonious when you’ve never been tempted to am-scray.

As usual the most interesting bits are from experienced police officers:

Detective Senior Sergeant David Harvey held a media conference in Rotorua this afternoon, but would not confirm any speculation. When asked where police believed the money had gone, he simply replied “overseas”, before refusing to answer any further questions.

$6-million: That’s simply amateur hour when compared to professional thievery such as Blue Chip. The Austrialia-based bank stands to lose big-time if the investors’ lawyer can convince New Zealand courts that the contracts are either unenforceable or void.

Auckland barrister Paul Dale is launching a High Court challenge on behalf of more than 250 investors. Dale says his clients’ contracts are illegal for a number of reasons including that they breached the country’s Securities Act and Fair Trading Act.

If Dale is successful and the contracts are thrown out the developers will be left with a glut of apartments unsold and unrented, with price tags well below what they originally sold for. Standing behind the developers is Westpac. The Australian bank has been a major player in the New Zealand property market and has financed a number of developers that did business with Blue Chip.

Thank God for Paul Dale because from what I have seen the New Zealand government has done nothing to help the victims of Mark Bryers’ +80 million franchise fraud.

Business format franchising is very useful in insulating owners from liability. One type of liability is when people, downstream, sue the corporation because of its alleged fraudulent dealings. Bryers set up +160 companies.

Not many kiwi real estate investors are smiling as much as Bryers, a disbarred lawyer left, appears to be these days while biding his time in sunny Australia.

Neil Hickman, with wife Michelle and their children Lewis (6) Lauren (11) and Holly (10), moved here from the UK for a better life but have lost their life savings after investment company failures. Photo / Martin Sykes

Good job: Naturally, raise enough doubt to have the contracts set aside as unenforceable because they were based in fraud.

More body parts are washing up on New Zealand’s shoreline in the continuing Blue Chip scandal.

They say Greenstone and the Blue Chip group had an agency relationship, including a profit-share arrangement. They are also taking action against three Blue Chip-recommended lawyers over the advice they gave – Jonathan Mathias, Zeljan Unkovich, and Hamilton firm Foster, Milroy & Turketo.

Eight out-of-pocket investors in bankrupt property company Blue Chip are suing their Blue Chip-recommended lawyers for breach of duty for their handling of millions of dollars worth of apartment purchases due to settle within weeks.

They say lawyers Jonathan Mathias, Zeljan Unkovich and the law firm Foster Milroy & Turketo who habitually did Blue Chip work, were recommended to investors for legal advice when buying apartments in the Barclay development in downtown Auckland about two years ago.

The investors claim they were dissuaded from using their own lawyers by Blue Chip, who they say told them its property schemes were complex and their own lawyers might not understand how they worked.

But Mathias, Unkovich and Foster Milroy & Turketo regularly did Blue Chip-related work and knew how the schemes operated, the investors say they were told. Some say Blue Chip threatened not to pay their legal fees unless they used lawyers Blue Chip recommended. Specifically, the plaintiffs allege the lawyers failed to advise them of the implications of the transactions they were signing or to give them any advice about the documentation.

So its the lawyers and franchisor only? No: Here are the lenders, sales agents…

The claim is part of the first significant lawsuit against Blue Chip. Other defendants have been named as Greenstone Barclay Trustees, GE Custodians (a lender), Tasman Mortgages and Executive Mortgages (mortgage brokers) and Blue Chip associate Bribanc (now know as Vault Realty).

Fraud claims have been brought against Tasman and Executive, where it’s alleged one or both fraudulently altered the loan documentation for one investor whose income was misstated, and mortgages were obtained from GE Custodians on the basis of fraudulent conduct.

…but last if not least, the property appraisers.

Described by Dale [Paul Dale, the Hickman’s lawyer] as naive and unsophisticated investors, the Hickmans also relied on a valuation from Blue Chip associate Bribanc Real Estate that they did not even see. Dale is arguing that, as with several plaintiffs’ properties, their apartment was over-valued.

They are seeking an injunction and although I am not a lawyer they appear to have to satisfy a pretty low legal standard:

…all the plaintiffs need prove is that they can mount a credible argument against the developers and Blue Chip.

Whatever happens, there were no aligned interests or a conspiracy to commit fraud. Only a nut-job would ever think such a thing.

Maria Slade at the ever-vigilant New Zealand Herald reports today that the 2,000 investors who have lost over $84-million in the Blue Chip franchise collapse are being encouraged to apply for legal aid to finance their attempts at getting thier money back.

Commerce Minister Lianne Dalziel says she is:

interested in helping Blue Chip investors find ways and means to access legal advice, particularly in this case where lack of funding is a barrier to legal recourse.

This is a first: I have never seen a publicly funded legal aid program used to fund a franchise legal action.

Not that surprising that the New Zealand government doesn’t want to touch the Blue Chip mess with a 10 foot pole. It’d raise too many questions about lax commercial regulation, I’d imagine.

International financial market laughingstock? Or some other alarmist conclusions.

The second is that the the lawyers and valuation firms are being scrutinized for their professional competence.

Law firm Ellis Law, together with barristers Paul Dale and Daniel Grove, are acting on behalf of several hundred of them. Activity includes taking legal action against solicitors over allegedly negligent advice they gave on the investments.

Valuers who provided allegedly inflated valuations on properties sold through the Blue Chip scheme are also in the lawyers’ sights.

But we’re missing a key ingredient to the Blue Chip fraud sausage: The lenders. Where are they in this fiasco? The last time I checked, there should be some type of regulation or lapdog self-regulation to cover these lenders.

Could it be the government is handing over the heads of the small fries [no-name lawyers and valuators] to avoid looking responsible for not regulating lenders sufficiently?

The Kiwi government knew or would have been reasonably been expected to know that lax or no lending regulations causes loss.

When the chickens come home to roost, the government blames everyone except themselves.

This fraud would have been impossible without a source of funds. I suspect the government was asleep at the switch as $ millions fed this humongous scam.

Remember: Sue the SOBs with insurance, when you don’t have the cojones to sue the government and Her Majesty’s ministers.